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Sustainability 2019, 11(8), 2253; https://doi.org/10.3390/su11082253

Exploring the Effects of Government Policies on Economic Performance: Evidence Using Panel Data for Korean Renewable Energy Technology Firms

1
Department of International Trade, Kyonggi University, 154–42, Gwanggyosan-ro, Yeongtong-gu, Suwon-si, Gyeonggi-do 16227, Korea
2
Department of Economics, Kyonggi University, 154–42, Gwanggyosan-ro, Yeongtong-gu, Suwon-si, Gyeonggi-do 16227, Korea
3
Department of Management and Accounting, Habat National University, 125, Dongseodae-ro, Yuseong-gu, Daejeon 34518, Korea
*
Author to whom correspondence should be addressed.
Received: 5 March 2019 / Revised: 1 April 2019 / Accepted: 10 April 2019 / Published: 15 April 2019
(This article belongs to the Section Energy Sustainability)
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PDF [290 KB, uploaded 15 April 2019]

Abstract

Previous studies have investigated how government policies on renewable energy technology (RET) affect economic performance at the industrial level. However, each firm in the RET industry is heterogeneous in terms of their capacities, resources, and the amount of public subsidies they receive. Considering the context in which public subsidies are provided to firms, this study econometrically investigates the effects of government policies on firms’ financial performance using panel data from the Korean RET industry. We consider the results of various panel framework tests; establish a panel vector autoregressive model in first differences; and test the dynamic relationships between firms’ financial performance, government subsidies (R&D- and non-R&D-related), firm size and age, and organizational slack, using a bias-corrected least squares dummy variable estimator. We find that R&D- and non-R&D-related subsidies positively affect firms’ financial performance in the long run. In the short run, there are bidirectional positive causal relationships between firms’ financial performance and organizational slack (and non-R&D-related subsidy), and firm size and non-R&D-related subsidy. A positive short-run relationship runs from R&D-related subsidy to firms’ financial performance, from firm age to non-R&D-related subsidy, and from firm size to firm age. Further, there are dynamic effects in all estimations, demonstrating that the dependent variables of the previous period enhance their values in the current period. The results provide some policy and strategic implications. View Full-Text
Keywords: renewable energy technology industry; government policies; firms’ financial performance; dynamic panel approach renewable energy technology industry; government policies; firms’ financial performance; dynamic panel approach
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited (CC BY 4.0).
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Sung, B.; Choi, M.S.; Song, W.-Y. Exploring the Effects of Government Policies on Economic Performance: Evidence Using Panel Data for Korean Renewable Energy Technology Firms. Sustainability 2019, 11, 2253.

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